There are a great many great things afoot, so it might be understandable some transferred excitement (or dread) into the realm of global currencies. The British are set to leave the European Union, though nobody really knows what that means let alone what it might lead to. While the US was closed for MLK remembrances, sterling was all over the [...]
Inflation in China slowed somewhat in December, as the Consumer Price Index decelerated to 2.1% from 2.3% in November. Very much like in the US, Europe, and Japan, the CPI level in China continues a lengthy stretch significantly below the official monetary target. For China, the PBOC has set 3% as its definition of “price stability.” The last time inflation [...]
It may seem strange that one of the primary forces behind the Bretton Woods arrangement was John Maynard Keynes. That is because what goes on in his name today is often nothing like what he proposed. This is not an endorsement of those ideas, only recognition and deep appreciation that during the worst consequences of the worst kinds of economic [...]
Then-Federal Reserve Chairman Ben Bernanke testified before Congress on May 22, 2013, that taper was for officials a strong consideration. Though QE4, the UST portion of the restored balance sheet expansion, wasn’t yet six months old and he had promised, sort of, at the start of QE3 that both would be open-ended, sort of, his message to the legislature was [...]
For all the fuss about speculators in Hong Kong, China’s central bank doesn’t seem very capable of handling them. Last week the offshore RMB money rate was driven once more to ridiculous proportions, with conventional “wisdom” attributing it to intentional PBOC policy. That seemed to be the case on Thursday, where the overnight HIBOR rate (CNH) was 38.335%, but not [...]
There are times when the illusion is understandable, if still an illusion. On days like today, it surely seems like the PBOC’s power and influence has been established and displayed. The overnight HIBOR rate (CNH) was pushed to a ridiculous 38.335%, the second highest on record. And given that “drain” of RMB from offshore Hong Kong, sure enough CNY rose [...]
Did CNY flash crash yesterday? That it is even being contemplated and argued is itself an indication of these times. According to pretty much all market data, CNY fell below 7.0 to the dollar just prior to the US open. It had been trading its usual (for the past week or so) artificial, non-volatile sideways at around 6.96 when for [...]
There are usually ceteris paribus assumptions lurking behind every mistaken impression in economics, including monetary economics. If Central Bank X does Y, where Y is a plus sign it is believed to be “accommodation” or “loosening.” Rarely if ever is there an account of money outside of this condition, except in only the most extreme of circumstances. In the past, [...]
China’s big problem can be succinctly described as where Economics met economics. Capital “E” Economics pushed authorities to over-financialize China in response to the Great “Recession”, which China’s government was only too enthusiastic to do even though its monetary regime at the PBOC better understood what was at the time happening than any of the central bankers in the West [...]
The Chinese have been undergoing quite a bit of stress lately, with markets including stocks more likely to be in turmoil than not. In fixed income, the Finance Ministry was slightly shaken by a failed auction today, its first since summer 2015. Yesterday, government bond futures trading had to be suspended when the 10s and 5s experienced their largest drop [...]
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